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EU adds Saudi Arabia to draft terrorism financing list: report

Kingdom was determined to have fallen short in combating money laundering and terror financing, Reuters reports.
The European Commission has added Saudi Arabia to an EU draft list of
countries that pose a threat to the bloc because of lax controls against
"terrorism financing" and "money laundering", sources told Reuters news
agency.

The move comes amid heightened international pressure on Saudi Arabia
following the brutal murder of Saudi journalist Jamal Khashoggi.

The EU's list currently consists of 16 countries, including Iran, Iraq,
Syria, Afghanistan and North Korea, and is mostly based on criteria used
by the Financial Action Task Force (FATF), a global body composed by
wealthy nations meant to combat money laundering and terrorism
financing.

But the list has been updated this week, using new criteria developed by
the EU Commission since 2017. Saudi Arabia is one of the countries
added to the updated list that is still confidential, one unidentified
EU source and one unnamed Saudi source were quoted as saying.

A second EU official said other countries were likely to be added to the
final list but declined to elaborate as the information is still
confidential and subject to change.

An EU commission spokesman said he had no comment on the content of the list as it had not been finalised yet.

Saudi authorities did not immediately respond to requests for comment.
Killing Khashoggi

The move is a setback for Riyadh at a time when it is striving to
bolster its international reputation in order to encourage foreign
investors to participate in a huge transformation plan and improve
financial ties for its banks.

Khashoggi, who was a columnist for The Washington Post and a vocal
critic of Saudi Crown Prince Mohammed bin Salman, was killed inside
Riyadh's consulate in Istanbul in October.

His gruesome murder and Saudi Arabia's shifting narrative over his death
provoked widespread criticism and damaged the kingdom's image.

Apart from reputational damage, the inclusion on the list complicates
financial relations with the EU. The bloc's banks will have to carry out
additional checks on payments involving entities from listed
jurisdictions.

The provisional decision needs to be endorsed by the 28 EU states before being formally adopted next week.
Saudis fall short

Countries are blacklisted if they "have strategic deficiencies in their
anti-money laundering and countering the financing of terrorism regimes
that pose significant threats to the financial system of the Union", the
existing EU list says.

Under the new EU methodology, jurisdictions could also be blacklisted if
they do not provide sufficient information on ownership of companies,
or if their rules on reporting suspicious transactions or monitoring
financial customers are considered too lax.

Saudi Arabia missed out on gaining full FATF membership in September
after it was determined to fall short in combating money laundering and
terrorist financing.

The government has taken steps to beef up its efforts to tackle graft
and abuse of power, but FATF said in September that Riyadh was not
effectively investigating and prosecuting individuals involved in larger
scale money laundering activity, or confiscating the proceeds of crime
at home or abroad.